Lifestyle International Holdings, the operator of Hong Kong’s popular Sogo department stores, saw its net profit plunge by a half last year even as sales and turnover grew. Total proceeds from sales jumped 14 per cent to HK$11.7 billion (US$1.5 billion), while turnover grew 16 per cent to HK$4.36 billion (US$555 million), company said on Monday. That was not enough to prevent net profit falling by almost 50 per cent to HK$1.69 billion (US$ 215 million), roughly in line with the HK$1.7 billion consensus estimate in a Refinitiv survey of 30 analysts. Lifestyle International attributed the slump in profit this year mainly to losses sustained from investment income and lower revaluation gains from its investment properties. Profit in 2017 had been boosted by a one-off gain of HK$420.8 million from the disposal of a majority stake in a subsidiary. “Hong Kong, the group’s home market, saw its economic growth slow in the second half of 2018 under the shadow of the US-China trade war dispute and slowing Chinese economy,” said Kam Shim Lau, the firm’s executive director. Weakening yuan, possible China slowdown worry Sogo store operator as profit plunges by half “Looking ahead, the group predicts a single digit growth in the first half of 2019 and adopts a cautious approach for 2019.” Earnings per share amounted to HK$1.08, and the company said it will pay a final cash dividend of 37 cents per share. Lau said 2019 would be a challenging year for Hong Kong in light of the possible effect on consumer sentiment of a decline in wage growth and weakness in asset prices. Sogo Causeway Bay, the brand’s flagship store in Hong Kong’s main shopping thoroughfare, recorded a 10.5 per cent growth in sales last year. That was the result of an enhanced shopping experience, according to Terry Poon Fuk-chuen, chief financial officer of the group, brought about by the widening of brand offerings following the renovation of the fourth floor last year. Meanwhile the Tsim Sha Tsui branch, predominantly frequented by mainland tourists, experienced a 30.3 per cent increase in sales for the year. Cosmetics and skincare products were the key drivers of growth, while Sogo’s biannual “Thankful Week” events in May achieved record-breaking sales revenue. “The company is confident that the high-speed rail and mega bridge will continue to drive traffic and sales of our stores, especially the Tsim Sha Tsui branch which is located near the high-speed rail station,” added Poon. US-China trade war: wary mainland Chinese tourists have driven Hong Kong’s shopping sector to a standstill The Hong Kong-Zhuhai-Macau Bridge – the world’s longest sea crossing – opened on October 24 while the high-speed railway connecting Hong Kong to multiple mainland destinations began operations a month earlier. Lifestyle International also provided an update on its Kai Tak property project. The development, which consists of two 18-storey towers with a gross floor area of 101,000 square metres, is expected to be ready by the end of 2022. It will feature a new Sogo department store besides other retailing, entertainment, dining and lifestyle facilities. “We are hoping to attract more cross-district consumers nearby Eastern Kowloon upon the completion of the Sha Tin to Central link,” said Thomas Lau Luen-hung, chairman of Lifestyle International. Lau said the increasing development of offices and residential buildings in the area would also attract a steady footfall.